Monday, June 15, 2009

Stock market in Asian region witnessed another mute Monday on 15 June 2009, as most of the regional stock markets ended the day lower, after G-8 finance ministers discussed the need to prepare appropriate strategies for unwinding the extraordinary policy measures taken to respond to the crisis once the recovery is assured. These “exit strategies” will vary from country to country, are essential to promote a sustainable recovery over the long term.

G8 finance ministers acknowledged "signs of stabilization" in the global economy and said that the IMF should now study the best way to roll back from the prior crisis stimulus measures taken even though it's still early to shift strategies.

US Treasury Geithner said that the policy actions have brought a very important "reduction" in concern of deep global recession, reduced deflation risks and systematic risks in financial system. But it's not a point where "we can say we have a recovery in place".

However, participants remained cautious in stock specific activity following statement issued by UK Finance Minister Darling said there would be a return to growth towards of the year but "we're not there yet". IMF MD Strauss-Kahn said recovery is "weak" and many actions still need to be taken. Growth as average will only come back at beginning of 2010 and unemployment will peak at start of 2011.

On Wall Street, it was a quiet week for the US market that ended on a relatively steady note on Friday. Indices managed little gains for the week. For the day, stocks spent most of the session confined to a narrow trading range in negative territory, but managed to move higher heading into the final leg of trading.

For the week, The Dow Jones Industrial Average gained 36.14 points (0.4%) for the week to end at 8,799.26. Tech - heavy Nasdaq gained 9.38 (0.5%) to end at 1,858.8. S&P 500 gained 6.12 (0.7%) to end at 946.21.

In the commodity market, crude oil fell for a second day on speculation its dollar-driven rally to a seven-month high last week-outpaced prospect for a recovery in fuel demand.

Crude oil for July delivery dropped as much as $1.20, or 1.7%, to $70.84 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $71.05 a barrel at 3 p.m. in Singapore. The contract fell 0.9% to $72.04 a barrel on June 12, its first decline in four days, after a plunge in European industrial production dented confidence in the global recovery and boosted the dollar, reducing the investment appeal of commodities. Oil reached $73.23 on June 11, the highest in seven months.

Brent crude for July delivery fell as much as $1.07, or 1.5%, to $69.85 a barrel on London’s ICE Futures Europe exchange. The contract expires today. The more actively traded August contract declined as much as $1.10, or 1.5%, to $70.70 a barrel.

Gold declined to the lowest in more than three weeks as a rallying dollar eroded interest in the precious metal as a haven investment. Gold for immediate delivery fell as much as 0.4% to $935.20 an ounce, the lowest since 20 May 2009, and was at $937.18 by 8:30 a.m. in Singapore.

In the currency market, US dollar starts the week with some strength on comments from Russia and pull back in oil prices. Just ahead of BRIC summit, Russian Finance Minister Kudrin said that it's "too early" to speak of an alternative for dollar as reserve currency and fundamentals of the greenback are still in "good shape". Kudrin also said there is no plan to change the structure of Russia's investments significantly in the near future.

The Japanese yen eased against major currencies on Monday. The Japanese currency quoted at 98.41 against greenback.

The Hong Kong dollar was trading at HK$ 7.7506 against the dollar. Actually The Hong Kong dollar is pegged at HK$ 7.8 to the U.S. dollar but can trade between HK$ 7.75 and HK$7.85 to the U.S. dollar.

In Sydney trade, the Australian dollar fell over a cent on Monday, dragged down by weaker stock markets, a stronger US dollar and lackluster commodity prices. At the local close, the dollar was trading at 80.38 US cents, down from Friday's close of 81.52 cents. It tumbled in the last hour of local trade, hindered by a firmer US dollar that posted its sharpest one-day gain in a week on Monday.

In Wellington trades, the New Zealand dollar closed slightly down against the greenback, following statements by Russian and Japanese finance ministers supporting the US dollar at the G-8 conference. The kiwi closed the local session at US63.75c, down from US64.25c on Friday night, while edging up against the aussie to A78.97c, from A78.95c.

The South Korean won ended at 1,262 won to the dollar, down 8.1 won from Friday's close, as offshore investors picked up the greenback for safer bets amid setbacks in stock markets and renewed geopolitical concerns following North Korea's nuclear test last month.

The Taiwan dollar weakened faster. The Taiwan dollar fell against the US dollar as it was trading lower at NT$ 32.940, down by NT$ 0.140 from Thursday’s close of NT$32.800.

Coming back in equities, Asian equities closed mostly lower in subdued trade, with energy and mining stocks slipping in Sydney and Tokyo but other sectors of the market finding some rotational buyers.

In Japan, the stock index dropped, as investors prompted for booking profit after key benchmark index exceed psychologically important 10,000 lines last week, though losses were curbed, as investor sentiment remains upbeat amid reinforced hopes about a recovery from the global recession. The Nikkei 225 Stock Average index dived 96.15 points, or 0.95% to 10,039.67, while the broader Topix index shed 3.72 points, or 0.4% to 946.82.

In Mainland China, stock index closed off an early low by finishing the session higher, snapping two days of loosing streak, with eight of ten sector ended in green terrain amid hopes of furthers stimulus aid from the government after the Chinese officials signaled government will continue to ensure sufficient liquidity to bolster domestic demand and sustain economic growth. The market also bounced on sustained optimism about global economic recovery.

The Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, climbed up 1.67%, or 45.78 points, to 2,789.54, meanwhile the Shenzhen Component Index added 2.33%, or 244.83 points, to 10,768.96.

On the economic front, China's Ministry of Commerce said that the amount of used foreign direct investment (FDI) fell 20.4 percent to stand at $34.05 billion year on year in the first five months in China. In May alone, the investment dropped 17.8 percent to $6.38 billion, the eighth straight monthly fall.

In Hong Kong, the stock market plummeted, snapped three days of winning streak as investors prompted for profit booking across the sector after index touched nine months high last week. Major heavyweight were sold for gains as investors speculated that this year’s rally has outpaced prospects for growth in the economy and corporate earnings.

In Australia, the stock market tumbled, snapped three days of winning streak, pressured by weak commodity prices and on concern major capital raisings drained cash from the market. Shares of materials and resource trimmed as investors intended on harvesting profits after pullback in commodity prices, meanwhile the energy sector has eased with crude oil falling from eight month highs.

At the closing bell, the benchmark S&P/ASX200 index melted 30.5 points, or 0.75%, to 4,031.7, while the broader All Ordinaries dived 31.1 points, or 0.77%, to 4,030.4.

On the economic front, the Australian Bureau of Statistic said total personal finance commitments rose by 0.2% in April to A$6.27 billion. Monthly home loans rose for the seventh consecutive month, with housing finance commitments increasing 1.9%, while commercial credit slid 12.9%.

In New Zealand, equities commenced the week in the green terrain on Monday. The share market registered a second consecutive rise in a row. At the closing bell, the NZX50 advanced 0.55% or 15.33 points to 2825.15. The NZX 15 was up 0.64% or 32.93 points to close at 5151.01.

On the economic front, New Zealand’s bank profits have fallen during the recession, according to BNZ chief executive Andrew Thorburn despite politicians arguing that interest rate cuts have not been passed on to customers. Reserve Bank Governor Alan Bollard announced on Thursday the official cash rate (OCR) would stay at 2.5 percent. "Despite the fact that we kept rates on hold this week we do still believe there is room for banks to cut their short term rates, bearing in mind that they haven't moved since our last 50 basis point cut in the April OCR review," Dr Bollard said.

Meanwhile, New Zealand manufacturing sales rose for the first time in five quarters, led by increased production in the meat and dairy industries. However, the figures for the March quarter published today are being described as "awful", despite volumes showing a small increase. Total seasonally adjusted manufacturing sales volumes were up 0.2 percent from the previous three months. The two other industries with increases were petroleum and industrial chemicals, and beverages, malt and tobacco.

New Zealand’s service sector remains in the shadows, but activity doesn’t appear to be getting any darker, according to the BNZ Capital - Business NZ Performance of Services Index (PSI). Business NZ chief executive Phil O’Reilly said that the May result reinforced views that the level of carnage seen in the services sector abroad hasn’t been as bad in New Zealand. The PSI for May stood at 46.2, which was 2.5 points up from April, and almost identical to the February 2009 result.

In Singapore, the stocks index erased gains, with broad based sell off across the sector after the government reported the city’s employers had fired more workers last quarter than initially estimated and after the Group of Eight finance ministers signaled they may start to withdraw stimulus spending. Shares of resources and energy issue succumbed amid pullback in crude oil and metal prices. The blue chip Straits Times Index eased 60.51 points, or 2.55%, to 2,316.56.

On the economic front, the Singapore statistics department said the retail sales index plunged 11.7% in April as compared a year earlier as rising unemployment and the nation’s deepest economic slump in more than four decades led consumers to buy fewer cars and household equipment. Retail sales (seasonally adjusted) declined by 3.1% in April 2009 compared to March 2009. Excluding motor vehicles, retail sales (seasonally adjusted) rose by 1.1%.

The Ministry of Manpower said Singapore’s unemployment rate rose to 3.3% quarter ended March, up from 2.5% in the previous period as the global economic downturn took its toll on the city-state’s labour market. Employers cut 12,760 jobs and total employment contracted for the first time in almost six years.

In Taiwan, stock market in Taiwan broadened its worst weekly performance of 2009, posting its biggest daily drop in about one and half month, as investors judged a rally prompted by improved ties with China has overvalued earnings prospects. Investors sold shares across the board following recent rallies, sending heavyweights sharply lower.

The main Taiex share index extended its downward movement as the Taiex index tumbled 222.67 points or 3.45%, closing the day at 6225.56, the lowest closing since 30 April 2009 when market closed at 5992.57. It is also the biggest single-day percentage fall since 17 April 2009.

In Philippines, the stock market continued to take an uphill, closing marginally higher, assisted by selective buying in the key heavy weight stocks. The benchmark index PSEi escalated 0.54% or 14.05 points to 2,612.85, while the All Shares index mounted 1.15% or 18.98 points to 1,664.62.

In India, the key benchmark indices fell for the third straight day as investors cashed in on gains after a recent solid surge in stock prices. Weak global markets triggered profit taking. World stocks fell after a call from the world's top finance ministers to rein in unprecedented monetary and fiscal stimulus. The BSE 30-share Sensex closed down 362.42 points, or 2.38%, to 14,875.52. The S&P CNX Nifty went down 99.40 points or 2.17% to 4,484.

Elsewhere, Malaysia's Kula Lumpur Composite index was up 0.09% or 1.02 points to 1091.17 while Indonesia’s Jakarta composite index ended the day lower at 2069.88.

In other regional market, stocks in Europe traded lower on Monday as top finance ministers said they would look to end the unprecedented monetary and fiscal stimulus that has helped the global economy come close to stabilizing after the credit crunch. By region, the U.K. FTSE 100 index fell 1.7% to 4,368.10, the German DAX index fell 1.9% to 4,975.27 and the French CAC 40 dropped 1.8% to 3,267.39.

The domestic stock market closed on a weak note on the back of heavy selling pressures across the sectoral indices backed by the weak global markets. The investors booked profits after a recent solid surge in the stock prices. There was weakness in the World stocks after the Finance Ministers from the Group of Eight countries on Saturday said that they have initiated the discussions regarding how to unwind the fiscal and monetary policy measures undertaken in response to the financial and economic crisis that spread last year. The volatility was high during the trading session and it drifted lower at the initial trade due to weak Asian Markets and lower index futures. From the sectoral front, the Bankex stocks remained in the lime light on the back of reports of a cut in the state set post office return rates that increased the expectations that the other rates would also trend lower. In the domestic front, the investors off-loaded position across almost all the sectors led by Oil and Gas, Metal, capital Goods, Realty and Auto index.

The weakness prevailed in the market since the initial bell as the domestic stock market today opened with a negative gap but soon recovered from the fall to enter into the positive territory. But the market did not able to sustain the momentum and again changed its gears to continue its southward journey till the final closing of the session. Moreover in the global arena, the US Markets closed mixed on Friday. There was narrow trading range in the southward throughout the day however towards the end some buying sentiments helped major indices to close in green. Materials stocks closed with a loss of 1.3%, which have provided leadership in recent weeks, were knocked lower as commodities came under pressure amid a rally in the U.S. dollar. On stock specific move investment services firm BlackRock (-6.04) trailed after updating its outlook to reflect its agreement to pay $13.5 billion for the global investors business from Barclays (-0.63).

Among the Sensex pack 10 stocks ended in positive territory while 20 closed in negative. The market breadth indicating the overall health of the market remained weak as 1,876 stocks closed in red while 767 stocks closed in green while 58 stocks remained unchanged in BSE.

The BSE Sensex closed lower by 362.42 points or 2.38% at 14,875.52 and NSE Nifty fell by 99.40 points or 2.17% at 4,484. The BSE Mid Caps and Small Caps closed with losses of 121.83 and 128.90 points at 5,113.20 and 5,885.76. The BSE Sensex touched intraday high of 15,261.03 and intraday low of 14,807.26.

On the global markets front the Asian markets which opened before the Indian market, closed in red. Taiwan Weighted, Strait Times, Hang Seng, Seoul Composite and Nikkei, closed lower by 3.45%, 2.55%, 2.07%, 1.13% and 0.95% at 6,225.56, 2,316.56, 18,498.96, 1,412.42 and 10,039.67 respectively..

European markets which opened after the Indian market are trading in negative. In Frankfurt the DAX index is trading lower by 2.11% at 4,962.10 and in London FTSE 100 is trading down by 1.64% at 4,369.30.

The BSE Power index decreased (1.62%) or 48.38 points at 2,935.28. Losers are GVK Power (7.59%), Torent Power (7.28%), Tata Power (2.92%) and Suzlon Energy (1.98%).

CG Impex Ltd fell 4.85% to close at Rs 5.69. The company has announced that the Board of Directors of the Company at its meeting held on June 06, 2009, inter alia, has, recommended for approval of the Shareholders, a Right Issue of Equity Shares in the ratio of three equity shares of the Company of Rs 10/- each for every one equity share of the Company held by the Shareholders of the Company as on a Record Date to be fixed later for this purpose.

Tanu Healthcare Ltd surged 4.76% to Rs3.30. The company has informed that as per the direction of the Honorable High Court, Mumbai, the Company has convened the EGM of Shareholder on June 13, 2009 in the matter of the Scheme of Amalgamation of Blue Cross Generic Pvt Ltd with Socrus Bio Sciences Ltd (Formerly Known as Tanu Healthcare Ltd). EGM of shareholders has approved the Scheme of Amalgamation.

3i Infotech Ltd dipped 4.14% to Rs80.95. The company has informed that, on June 15, 2009, the Company announces its entry into the Media & Broadcasting industry as a System Integrator and will offer a unique value proposition to media and broadcasting companies, with best-of--the-breed products from leading global Media & Broadcast solution vendors, complemented with the Companys own expertise in System integration and Project Management Services.

Gail India Ltd slipped by 1.52% to Rs282.65. The company has announced the following Audited results for the quarter & year ended March 31, 2009. The Company has posted a net profit of Rs 6300.20 million for the quarter ended March 31, 2009 as compared to Rs 7223.80 million for the quarter ended March 31, 2008. Total Income has increased from Rs 50349.50 million for the quarter ended March 31, 2008 to Rs 63220.80 million for the quarter ended March 31, 2009. The results for the Year ended March 31, 2009. The Company has posted a net profit of Rs 28037.00 million for the year ended March 31, 2009 as compared to Rs 26014.60 million for the year

The court has directed RIL to arrive at an arrangement along these lines within a month. It has also said the Ambani brothers may consult their mother if there is any difficulty at arriving at a conclusion.

However, it is unclear whether RIL intends to appeal against the current verdict in the Supreme court or go through with the stipulated process of arriving at a viable gas supply agreement.

RNRL had approached the court against RIL that had refused to give gas at $2.34 per mmbtu from the Krishna-Godavari basin.

RNRL had approached the court against RIL that had refused to give gas at $2.34 per mmbtu from the Krishna-Godavari basin.

Anil Dhirbhai Ambani Group (ADAG) claims right over 70% of KG-D6's initial output of 40 million standard cubic meters per day after the family split in in June 2005.

After the split Mukesh Ambani took control of RIL and Anil got financial services, communications and power business of the group through a series of demerger of firms.

As per the Memorandum of Understanding (MoU), RIL was to supply gas from its KG basin to RNRL for its upcoming 7400 megawatts (MW) power project at Dadri in Uttar Pradesh.

In December 2006, RNRL moved the Bombay High Court asking it to compel RIL to honour the gas agreement. Justice Anup Mohta, who heard the case, asked the companies to settle the matter internally under the June 2005 family agreement. The judge also restrained RIL from selling gas to third parties till the final order.

Unable to agree on the price, terms and quantity of gas, both firms approached the division bench of the Bombay High Court against the order of the single bench in early 2008. The hearing of the matter continued till February 2009. Thereafter, the division bench came out with an interim order allowing RIL to sell gas to third parties.

The interim verdict also mentioned that RIL's gas agreement, however, was subject to the court's final order.

The basic argument in the RIL-RNRL case pertained to the pricing and quantum of gas. During the course of hearing, RNRL made it clear that it wanted 28 million metric standard cubic meters per day of gas for 17 years for $2.34 per million metric British thermal unit (mmBtu), while RIL argued that it could not sell gas below the government-approved price of $4.2 per mmBtu.

The key benchmark indices fell for the third straight day as investors cashed in on gains after a recent solid surge in stock prices. Weak global markets triggered profit taking. World stocks fell after a call from the world's top finance ministers to rein in unprecedented monetary and fiscal stimulus. Index heavyweight Reliance Industries (RIL) tumbled following an unfavourable court ruling on gas sales. RIL slipped more than 7.5% after the court directed RIL and Reliance Natural Resources (RNRL) to sign gas supply deal. RNRL rose close to 25%.

Metal, capital goods, realty and auto stocks fell. The BSE 30-share Sensex was down 362.42 points, or 2.38%, up close to 70 points from the day's low and off close to 385 points from the day's high. The barometer index has lost 591.29 points or 3.82% in last three trading sessions. The Sensex today fell below the psychological 15,000 mark. The S&P CNX Nifty fell below the 4,500 mark.

Volatility was immense. The market edged lower in early trade on weak Asian stocks and lower US index futures. Bank stocks led a strong rebound later as the Sensex moved into green from red as reports of a cut in state-set post office return rates raised expectations that other rates in the economy would also trend lower. The recovery proved short-lived as an unfavourable court ruling in mid-morning trade pulled index heavyweight RIL lower.

The market extended losses later. It staged a strong intraday rebound in the past 30 minutes or so of trade.

Indian investors will closely watch the first installment of advance tax figures of India Inc. This will be a major trigger for the market as it provides clue to the corporate earnings of India Inc in Q1 June 2009. Companies have to pay advance tax in four installments. The first installment is due on 15 June 2009.

World stocks fell after finance ministers from the Group of Eight leading industrialized countries on Saturday, 13 June 2009, said they have begun discussing how to unwind the fiscal and monetary policy measures undertaken in response to the financial and economic crisis that spread last year. Noting a recovery in stock markets, rising consumer and business confidence and improvement in financial markets, the group "discussed the need to prepare appropriate strategies for unwinding the extraordinary policy measures taken to respond to the crisis once the recovery is assured," the finance ministers said in a statement.

"These 'exit strategies', which may vary from country to country, are essential to promote a sustainable recovery over the long term," they said.

European shares fell on Monday, tracking losses in Asia, and with mining and energy shares suffering from lower commodities prices. Key benchmark indices in France, Germany and UK were down by between 1.67% to 2.1%.

Most Asian stocks declined today, led by commodity companies, after metals and oil prices fell. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were down by between 0.95% to 3.45%.

But China's stocks rose 1.67% in volatile trade after the government signaled it will continue to ensure sufficient liquidity to bolster domestic demand and sustain economic growth. Chinese Premier Wen Jiabao said the government would adjust its 580 billion-dollar stimulus package announced late last year to meet changing economic conditions.

His comments came as data released last week showed China's exports plummeted for a seventh straight month in May 2009 as result of severe downturns in the key North American and European markets. But, China's industrial output and retail sales growth both accelerated in May 2009 from previous months as stimulus measures kicked in, fuelling hopes that the country could lead a global recovery.

Singapore retail sales suffered their biggest drop since 1999 as shoppers cut back on big-ticket items such as cars and furniture amid the city-state's worst ever recession. The statistics department said Monday that retail sales fell 11.7% in April 2009 after dropping 7.3% in March and 5.5 % in February. The government also said it slightly revised up its first quarter unemployment rate to 3.3% from 3.2% initially reported in April. The jobless rate was 2.5% in December 2008

Trading in the US index futures indicated Dow could fall 98 points at the opening bell today, 15 June 2009.

It was a lacklustre session for the US markets on Friday, 12 June 2009. The benchmark indices closed flat on that day. The Dow gained 28.34, or 0.3%. Nasdaq shed 3.57 points, or 0.2% while the S&P 500 added 1.32 points, or 0.1%.

Closer home, Finance Minister Pranab Mukherjee would present the Union Budget on 6 July 2009 and not 3 July, as was reported earlier, the Parliamentary Affairs Ministry said today. The Railway Budget will be presented on 3 July 2009 and the Economic Survey would be presented on 2 July 2009.

The government reportedly is considering a proposal to hike income-tax exemption available for interest payment on home loans to Rs 2.5 lakh a year, to boost demand and rebuild the slowdown-hit housing industry. At present, taxpayers taking housing loans are eligible for income-tax exemption on interest payment of up to Rs 1.5 lakh every year. Besides this, the repayment of principal amount is part of investments eligible for benefit under Section 80(C) of the Income-Tax Act, which has a ceiling of Rs 1 lakh.

Media reports also suggest that the upcoming Union Budget may bring some pleasant surprises for corporate India. Apart from doing away with the fringe benefit tax (FBT), the government is also considering removal of cess and surcharge on corporate taxes. Instead, the government may levy a common rate of direct tax on corporate income this fiscal onwards. Indian companies are charged a corporate tax of 30%, along with a surcharge of 10% and an educational cess of 2% on tax payable. As per the Finance Bill of 2007, the surcharge on income-tax was not levied on all firms with a taxable income of Rs 1 crore or less. The total tax payable, including surcharge and cess, stands at about 34% for a domestic company. The government is now looking to charge a single tax close to 34%.

Interest rates in India are falling thanks to ample liquidity in the banking system, low headline inflation and a loose monetary policy stance of the Reserve Bank of India. However, inflation may rise if oil and metal prices which have risen sharply in 2009 continue to rally.

As per reports, the government may cut interest rates on on small savings schemes which currently yields 8% by 50 to 75 basis ponits. A rate cut in the small savings scheme rate will allow banks to bring down their lending rates.

Finance minister Pranab Mukherjee last Wednesday said banks should provide credit at reasonable rates to spur growth, saying cuts in official rates by the Reserve Bank of India had not been passed on.

Indian stocks have soared in the past three months on a view that ample global liquidity and a return of risk appetite will help India Inc help raise funds for expansion which in turn will boost corporate profits. India Inc has already raised almost Rs 5,000 crore from three qualified institutional placements (QIPs) so far in 2009 and announced plans to raise another Rs 20,000 crore.

Many equity analysts have been raising earnings forecasts of India Inc on hopes that the new government will provide thrust on the infrastructure sector and push economic reforms to boost growth. Citigroup expects the economy to grow by 6.8% in 2009/10 and 7.8% in 2010/11.

A comfortable victory last month for the Congress-led United Progressive Alliance (UPA) government in elections for the 15th Lok Sabha has raised hopes for economic reforms. Reforms virtually came to a halt in the past five years of the Congress-led alliance government at the centre, when the Communists provided support to the government from outside for a large part of the five-year term. Left parties are opposed to economic reforms.

Investor expectations from the new government are high. Investors expect financial sector reforms such as increase in the cap on foreign direct investment in insurance sector to 49%, from 26% at present.

Unveiling the agenda of the government, President Pratibha Patil in her speech addressed to a joint session of both houses had last week indicated government's intension to divest stake in state-run firms. The government, however, intends to retain control over state-run firms and will continue to hold at least 51% stake. But some investors are concerned that the government's two key allies viz. the DMK and Trinamool Congress (TC) may oppose economic reforms.

Finance minister Pranab Mukherjee recently said there was a need to find ways to bring the economy back to higher growth path without increasing the fiscal deficit. He said the government would focus on infrastructure, agriculture and employment generating sectors to protect growth and jobs.

But rising metal prices is a cause of concerns for manufacturing companies as their raw material costs may shoot up.

The government's oil subsidy bill may remain high and it could continue to put pressure on the already high fiscal deficit if the government does not resort to decontrol of oil prices. However, the surging rupee against the dollar may mitigate the impact to some extent as India is a major importer of crude. Rising oil prices are a cause for concern, Oil Minister Murli Deora said today.

On the back of heavy buying by foreign funds, the Sensex has jumped 5,228.21 points or 54.19% in calendar year 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex has risen 6,715.12 points or 82.28%.

Mutual funds, too, have started receiving fresh investor money after a solid surge in the stock prices in the past three months. Net inflows into domestic equity mutual funds rose to Rs 1,930 crore in May 2009, the highest in 14 months, and more than twice the amount in the first four months of 2009, according to data from the Association of Mutual Funds in India.

Prime Minister Manmohan Singh recently said India will achieve an economic growth of at least 7% this fiscal and promised more resources for areas like infrastructure and public services. He said India will be able a growth rate of 8-9%, even when the world grows at a lower rate.

The Prime Minister said the reason behind his optimism was that India's savings rate, which determines the money that can be deployed for development projects, was still high at 35% of gross domestic product (GDP).

The BSE 30-share Sensex was down 362.42 points, or 2.38%, to 14,875.52. The Sensex rose 23.09 points at the day's high of 15,261.03 in mid-morning trade. At the day's low of 14,807.26, the Sensex fell 430.68 points in late trade.

The S&P CNX Nifty was down 99.40 points or 2.17% to 4,484. Nifty June 2009 futures were at 4520, at a premium of 36 points as compared to the spot closing of 4484.

The market breadth, indicating the overall health of the market was weak. On BSE, 763 shares rose as compared with 1,878 that declined. A total of 62 shares remained unchanged.

From the 30 share Sensex pack 20 fell while the rest rose.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) fell 7.48% to Rs 2,180.45 after the Bombay High Court directed RIL and RNRL to sign gas supply deal. The court has asked RIL to supply 28 million metric standard cubic meters per day (mmscmd) of gas for 17 years at $2.34 per million metric British thermal unit (mmbtu) to RRNL. This is much lower than the price fixed by the government for gas sale from the RIL block in the KG basin at $4.2 million per metric British thermal unit. RNRL rose 24.11%.

In January 2009, the Bombay High Court had issued an interim order saying Reliance Industries was allowed to sell gas at $4.2 per million British thermal units from its KG-D6 block in the Krishna Godavari basin off eastern India, pending a final judgment.

PSU OMCs rose on oil Minister Milind Deora's comments that the government may have to increase fuel prices if the recent rally in crude oil prices continues. BPCL, HPCL and IOCL rose by between 1.14% to 3.36%. The three state-run firms are selling fuel at a loss as crude oil prices have crossed $70 a barrel mark.

Metal stocks fell as LMEX, a gauge of six metals traded on the London Metal Exchange fell 2.32% on Friday. National Aluminum Company, Hindalco Industries, Tata Steel, Sterlite Industries and Steel Authority of India fell by between 0.21% to 7.61%.

Realty stocks fell on profit taking after a recent sharp surge triggered by expectations that stability at the Centre will attract more money from foreign investors into the sector which in turn will boost growth. Akruti City, DLF, Indiabulls Real Estate and Omaxe fell by between 4.03% to 5.939%.

Unitech and Indiabulls Real Estate, have already raised funds through qualified institutional placements (QIPs). A number of other realty funds have decided to raised funds by way of QIPs. The promoters of DLF last month sold a 10% stake in the secondary equity markets.

Bank stocks fell even as reports of a cut in state-set post office return rates raised expectations that other rates in the economy would also trend lower.

India's largest private sector bank by net profit ICICI Bank fell 0.94% as its American depository receipt (ADR) fell 2.32% on Friday, 12 June 2009. ICICI Bank cut prime lending rate by 50 basis points to 15.75% with effect from Friday, 5 June 2009. All the existing floating rate customers to benefit from the cut.

India's second largest private sector bank by operating income HDFC Bank was almost uncaged at Rs 1529.90. Its ADR fell 2.42% on Friday.

India's biggest bank in terms of branch network State Bank of India (SBI) rose 0.31% as an across-the-board 25 basis point cut in deposit rates will bring down the cost of funds. SBI on on Saturday, 13 June 2009 said it will cut deposit rates across all tenors by 25 basis points, with effect from 15 June 2009.

SBI chairman O.P. Bhatt recently said SBI's first priority is to absorb its associate banks. It is also looking to grow by buying domestic banks.

India's biggest dedicated housing finance firm by operating income HDFC rose 0.31%. HDFC plans to raise up to Rs 4000 crore after its board last Tuesday approved a proposal to raise Rs 4000 crore by selling bonds and warrants. The maximum dilution on conversion of all warrants to shares would be 3.5% of the expanded capital,

Some cement stocks rose on hopes government may boost spending on the infrastructure sector to boost economic growth. ACC, Ambuja Cements, Grasim Industries rose by between 0.94% to 1.39%.

Some healthcare stocks fell on profit taking after recent surge triggered by hopes the government will give primary importance to healthcare segment and health of citizens. Biocon, Wockhardt, Sun Pharmaceuticals Industries, Glnmark Pharmaceuticals fell by between 1.22% to 4.32%.

FMCG stocks rose on expectations the government to continue with its rural focus. FMCG firms derive substantial revenue from the rural market. Britannia Industries, United spirits, ITC, Hindustan Unilever rose by between 0.35% to 1.94%.

Outsourcing focussed IT stocks fell on worries higher borrowing costs and oil prices will threaten a recovery of the US economy. US is the biggest market for the Indian firms. India's second largest software firm by sales Infosys Technologies fell 0.44%. Its American depository receipt (ADR) was flat on Friday.

India's third largest software services exporter by sales Wipro fell 2% as its ADR fell 4.88% on Friday. Tata Consultancy Services and Wipro are reportedly among several multinational rivals preparing to bid for a $200 million outsourcing contract being considered by Britain's public postal service Royal Mail Group.

India's second-largest mobile operator by sales Reliance Communications fell 3.77%. It added 2.4 million users in May 2009, taking its total mobile subscribers to more than 7.7 crore, the company said on Monday.

Today domestic markets are likely to open negative as majority of Asian markets have opened with blood bath. The sentiments are weak across Asia as there is lack of specific news to drive the market. The US markets have also closed flat on Friday thus exuding lack of buying sentiments. In the domestic arena one could expect a lackluster trading throughout the day with an essence of mild volatility.

On Friday, the domestic markets closed with losses for the second consecutive day. The positive opening was better than anticipated however as the trading progressed the selling pressures engulfed the stocks at broader level despite positive cues from the Asian markets. The European markets on the other hand exuded negative cues. Traders were skeptic about the current high level of the benchmark indices and correction at this level seems to be inevitable. Funds and retail investors booked profits across sectors like Realty, Auto, Teck and CD as they closed with losses of 2.49%, 2.41%, 2.40% and 2.29% respectively. On the other hand, Metal and Oil & Gas stocks provided a support to markets as they gained 1.93% and 1.38% respectively. We expect the markets to be trading volatile.

The BSE Sensex closed with a loss of 173.53 points at 15,237.94 and NSE Nifty ended with a loss of 54.30 points at 4,583.40. BSE Mid Caps and Small Caps closed with losses of 112.55 points and 135.78 points at 5,235.03 and 6,014.66 respectively. The BSE Sensex touched intraday high of 15,600.30 and intraday low of 15,174.28.

On Friday, the US Markets closed mixed. There was narrow trading range in the southward throughout the day however towards the end some buying sentiments helped major indices to close in green. Materials stocks closed with a loss of 1.3%, which have provided leadership in recent weeks, were knocked lower as commodities came under pressure amid a rally in the U.S. dollar. Further the Semiconductor stocks also fell under pressure this session, sending the Semiconductor Index to a 1.8% loss. On stock specific move investment services firm BlackRock (-6.04) trailed after updating its outlook to reflect its agreement to pay $13.5 billion for the global investors business from Barclays (-0.63). The US light crude oil for July delivery closed low by 0.8% at $72.05 per barrel on the New York Mercantile Exchange.

The Dow Jones Industrial Average (DJIA) closed high by 28.34 points at 8,799.26 the NASDAQ Composite (RIXF) index declined by 3.57 points to close at 1,858.80 and the S&P 500 (SPX) closed flat at 946.21.

Today major stock markets in Asia are trading negative. Hang Seng is low by 269.66 points at 18,620.02. Shanghai Composite is low by 5.497 points at 2,738.26. Japan''s Nikkei is trading low by 99.71 points at 10,036.11. Strait Times is also low by 38.72 points at 2,338.35. KLSE Composite is up by 1.19 at 1,090.15.

Indian ADRs ended lower on Friday. In the telecom space, Tata Communication was down 4.04% and MTNL was down 7.54%. In the banking space, HDFC Bank was down 2.41% and ICICI Bank was down 2.32%. In the IT space, Wipro was down 4.88% while Infosys was down 0.03%, Satyam Computers as down 14.65% and Patni Computers was down 3.99%. In other sectors, Sterlite Industries was down 0.88%, Tata Motors was down 1.89% while Dr Reddy''s Labs was down 3.47%.

The FIIs on Friday stood as net buyers in equity and debt. The Gross equity purchased stood at Rs 3,581.80 Crore and gross debt purchased stood at Rs 10.00 Crore, while the gross equity sold stood at Rs 2,588.70 Crore and gross debt sold stood at Rs 0.00 Crore. Therefore, the net investment of equity and debt reported were Rs 993.20 Crore and Rs 10.00 Crore respectively.

On Friday, the partially convertible rupee closed at 47.61/62 per dollar, flat as compared to previous close at 47.60/61. The local currency had surged an intra day high of 47.37 against the green back.

On BSE, total number of shares traded were 56.51 Crore and total turnover stood at Rs 7,897.45 Crore. On NSE, total number of shares traded was 129.89 Crore and total turnover was Rs 23,706.55 Crore.

On NSE Future and Options, total number of contracts traded in index futures was 781871 with a total turnover of Rs 17,244.10 Crore. Along with this total number of contracts traded in stock futures were 463465 with a total turnover of Rs 28,402.22 Crore. Total numbers of contracts for index options were 1152359 with a total turnover of Rs 26,976.32 Crore and total numbers of contracts for stock options were 46406 and notional turnover was Rs 2,829.77 Crore.

Today, Nifty would have a support at 4,493 and resistance at 4,635 and BSE Sensex has support at 15,110 and resistance at 15,359.

We recommend a sell in Hindustan Construction Company from a short-term trading perspective. After recording a 52-week low at Rs 28.8 on March 12, the stock reversed direction and began to move north. However, around Rs 125, the stock encountered resistance and started to lose momentum. Triggered by the negative divergence in the daily RSI , the stock started declining. On June 8, it dived 9 per cent followed by a 7-per cent decline on June 12. The weekly RSI is declining from the overbought levels. The daily moving average convergence and divergence indicator is signalling a sell. Our price target is Rs 94. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 112.

The key benchmark indices may extend last two days of losses tracking weak Asia. Investors will closely watch the first installment of advance tax figures of India Inc. to be announced today. This will be a major trigger for the market as it provides clue to the corporate earnings of India Inc in Q1 June 2009.

Most Asian stocks declined today, led by commodity companies, after metals and oil prices fell. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan fell by between 0.67% to 2.86%. China's Shanghai Composite rose 0.24%.Foreign direct investment in China fell 17.8 % to $6.38 billion in May 2009 over May 2008 as companies cut spending to weather the worst economic slump since the Great Depression

It was a lacklustre session for the US markets on Friday, 12 June 2009. The benchmark indices closed flat on that day. In stock action, Bank of America shares rallied, but technology, energy and commodities retreated after crude prices slipped. The Dow gained 28.34, or 0.3%. Nasdaq shed 3.57 points, or 0.2% while the S&P 500 added 1.32 points, or 0.1% on a weekly basis too, the market closed with very modest gains.

Closer home, the government reportedly is considering a proposal to hike income-tax exemption available for interest payment on home loans to Rs 2.5 lakh a year, to boost demand and rebuild the slowdown-hit housing industry. At present, taxpayers taking housing loans are eligible for income-tax exemption on interest payment of up to Rs 1.5 lakh every year. Besides this, the repayment of principal amount is part of investments eligible for benefit under Section 80(C) of the Income-Tax Act, which has a ceiling of Rs 1 lakh.

As per reports, the upcoming Union Budget may bring some pleasant surprises for corporate India. Apart from doing away with the fringe benefit tax (FBT), the government is also considering removal of cess and surcharge on corporate taxes. Instead, the government may levy a common rate of direct tax on corporate income this fiscal onwards. Indian companies are charged a corporate tax of 30%, along with a surcharge of 10% and an educational cess of 2% on tax payable. As per the Finance Bill of 2007, the surcharge on income-tax was not levied on all firms with a taxable income of Rs 1 crore or less. The total tax payable, including surcharge and cess, stands at about 34% for a domestic company. The government is now looking to charge a single tax close to 34%.

Meanwhile, interest rates in India are falling thanks to ample liquidity in the banking system, low headline inflation and a loose monetary policy stance of the Reserve Bank of India. However, inflation may rise if oil and metal prices which have risen sharply in 2009 continue to rally.

Finance minister Pranab Mukherjee on last Wednesday said banks should provide credit at reasonable rates to spur growth, saying cuts in official rates by the Reserve Bank of India had not been passed on. This will help restore the environment for rapid growth and ensure that the growth process benefits, he said.

Indian stocks have soared in the past three months on a view that ample global liquidity and a return of risk appetite will help India Inc help raise funds for expansion which in turn will boost corporate profits. India Inc has already raised almost Rs 5,000 crore from three qualified institutional placements (QIPs) so far in 2009 and announced plans to raise another Rs 20,000 crore.

Many equity analysts have been raising earnings forecasts of India Inc on hopes that the new government will provide thrust on the infrastructure sector and push economic reforms to boost growth. Citigroup expects the economy to grow by 6.8% in 2009/10 and 7.8% in 2010/11.

A comfortable victory last month for the Congress-led United Progressive Alliance (UPA) government in elections for the 15th Lok Sabha has raised hopes for economic reforms. Reforms virtually came to a halt in the past five years of the Congress-led alliance government at the centre, when the Communists provided support to the government from outside for a large part of the five-year term. Left parties are opposed to economic reforms.

On the back of heavy buying by foreign funds, the Sensex has jumped 5,590.63 points or 57.95% in calendar year 2009 to Friday, 12 June 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex has risen 7077.54 points or 86.73% to 12 June 2009.

Mutual funds, too, have started received fresh investor money after a solid surge in the stock prices in the past three months. Net inflows into domestic equity mutual funds rose to Rs 1,930 crore in May 2009, the highest in 14 months, and more than twice the amount in the first four months of 2009, according to data from the Association of Mutual Funds in India.

Finance minister Pranab Mukherjee on last Thursday said there was a need to find ways to bring the economy back to higher growth path without increasing the fiscal deficit. He said the government would focus on infrastructure, agriculture and employment generating sectors to protect growth and jobs.

But rising metal prices is a cause of concerns for manufacturing companies as their raw material costs may shoot up.

The government's oil subsidy bill may remain high and it could continue to put pressure on the already high fiscal deficit if the government does not resort to decontrol of oil prices. However, the surging rupee against the dollar may mitigate the impact to some extent as India is a major importer of crude.

Finance Minister Pranab Mukherjee on 26 May 2009 said that a sustained stimulus to economic growth is possible by next round of reforms. He said reviving growth momentum is a top priority for the government adding that fiscal prudence will also be kept in mind.

Investor expectations from the new government are high. Investors expect financial sector reforms such as increase in the cap on foreign direct investment in insurance sector to 49%, from 26% at present.

Unveiling the agenda of the government, President Pratibha Patil in her speech addressed to a joint session of both houses had last week indicated government's intension to divest stake in state-run firms. The government, however, intends to retain control over state-run firms and will continue to hold at least 51% stake. But some investors are concerned that the government's two key allies viz. the DMK and Trinamool Congress (TC) may oppose economic reforms.

Prime Minister Manmohan Singh on Tuesday said India will achieve an economic growth of at least 7% this fiscal and promised more resources for areas like infrastructure and public services. He said India will be able a growth rate of 8-9%, even when the world grows at a lower rate.

The Prime Minister said the reason behind his optimism was that India's savings rate, which determines the money that can be deployed for development projects, was still high at 35% of gross domestic product (GDP).

Manmohan Singh also sought to allay fears that pump priming of the economy by way of stimulus packages announced earlier and measures that will follow in the ensuing months would fuel inflation. "It (expenditure towards infrastructure) will not add to inflation, but to our economic growth."

According to the Prime Minister, fiscal deficit had increased sharply but even then India had enough resources to spend on flagship programmes thanks to the average annual growth of 8.6% achieved during the past five years. He also said that his government was deeply committed to the agenda listed in the President's address, adding flagship programmes will be further strengthened and public delivery system made more transparent.

It was a quiet week for the US market that ended on a relatively steady note on Friday, 12 June, 2009. Indices managed little gains for the week. Fluctuation of the dollar imparted quite some impact on the commodities sector. News and economic report flow was relatively slow during the week. But the economic reports that checked in hinted at an improving US economy. Trading volumes were exceptionally low during the last two days of trading hinting that traders were in an extremely cautious mood.

The Dow Jones Industrial Average gained 36.14 points (0.4%) for the week to end at 8,799.26. Tech - heavy Nasdaq gained 9.38 (0.5%) to end at 1,858.8. S&P 500 gained 6.12 (0.7%) to end at 946.21. Seven of the ten sectors ended in the green led by the utilities sector. Consumer staples sector was the main laggard.

Cisco Systems and Travelers replaced shares of General Motors and Citigroup respectively in the Dow since Monday, 08 June, 2009.

During the week Treasury department announced that 10 of the 19 largest U.S. banks will be allowed to repay TARP funds. BB&T Corp, US Bancorp, Capital One, JPMorgan Chase, Bank of New York Mellon, American Express, Northern Trust and Goldman Sachs were among the companies that have received permission to repay TARP funds to the Treasury.

The Fed's Beige Book hit the wires during the middle of the week. It stated that the economy remains weak, but that the signs of decline are slowing. The Beige Book also revealed that five of the 12 Fed districts see economic declines moderating; several districts also indicated that their expectations have improved yet they do not see a substantial increase in economic activity through the end of the year.

Among the major economic reports expected for the week, the May Treasury deficit came in at $189.7 billion. The Commerce Department reported that this was slightly more than the consensus that called for a deficit of $181 billion and much larger than the prior deficit of $28.6 billion.

The Labor Department in USA reported on Thursday, 11 June, 2009 that while first-time claims for state unemployment benefits have declined or been flat over the most recent four weeks of data, ongoing claims have continued to reach fresh weekly highs. The number of initial claims fell 24,000 to 601,000 in the week ended 6 June, 2009. For the week ended 30 May, continuing claims for benefits reached a new record high, rising 59,000 to 6.82 million from an upwardly revised level in the prior week.

Initial claims represent job destruction, while the level of continuing claims indicates how hard or easy it is for displaced workers to find new jobs. Benefits are generally available for those who lose their full-time job through no fault of their own. Those who exhaust their unemployment benefits are still counted as unemployed if they are actively looking for work.

Among other important reports, the Commerce Department in USA reported that sales at U.S. retail stores increased 0.5% in May.

In the US market on Friday, 12 June, 2009, stocks spent most of the session confined to a narrow trading range in negative territory, but managed to move higher heading into the final leg of trading. The Dow Jones Industrial Average ended higher by 28.3 points at 8,799.26. The Nasdaq Composite Index, ended lower by 3.5 points at 1,858.8. S&P 500 ended higher 1.3 points at 946.2.

One of the market's recent primary leaders, materials stocks grappled with selling pressure as basic commodities got knocked around by a resurgent U.S. dollar. The weakness among commodities was easily visible among oil prices

Tech stocks also showed weakness during the session. That had weighed considerably on the Nasdaq Composite, which has lagged the other headline indices for the entire session. Weakness was particularly strong among semiconductor stocks for the second straight session.

Oil prices pared part of their earlier losses but ended ultimately lower on Friday, 12 June, 2009. Stronger dollar and comments from OPEC in its latest monthly statement took crude prices lower. But, crude registered good weekly gains. On Friday, crude-oil futures for light sweet crude for July delivery closed at $72.04/barrel (lower by $0.64 or 0.9%). During intra day trading, crude fell to a low of $70.8. For the week, crude ended higher by 5.3%.

The Organization of Petroleum Exporting Countries (OPEC), which now accounts for about one-third of the world's oil production, said in a monthly report that its May output from its 12 members averaged 28.27 million barrels a day, up 135,000 barrels from a month ago. Thus, OPEC's production rose for the second month. OPEC also said in the monthly report that 2009 global demand is expected to drop 1.6 million barrels a day from a year ago.

In the currency market on Friday, the dollar index, which weighs the strength of dollar against the basket of six other currencies, went up by 0.9%. Finance ministers from the Group of Eight industrial nations convened on Friday and Saturday in Italy as they attempted to lay groundwork for the meeting of G8 heads of state at their summit scheduled for next month. The dollar was higher against most of its rivals, with the euro down 0.5%.

For the year 2009, Dow is up by just 0.3%. The Nasdaq and S&P 500 are up by 17.9% and 4.8% respectively.

If you want to catch something, running after it isn't always the best way.

Signs of weariness are quite apparent among the bulls even though the Sensex eked out 1% gain last week. The broader markets actually cooled off after a frenzied run. The bulls have been doing a lot of running since early March. In fact, they may have come too far too fast. This increases the chance of fatigue. Same holds true for most global markets.

With company insiders resorting to more selling than buying, one wonders if their respective counters have hit the glass ceiling!

Market players would prefer to lighten their positions ahead of the F&O expiry when 50 stocks will go out of the NSE derivative segment. The coming month will see smaller lot size for many scrips.

We expect a cautious start due to indecisive trend in Asian markets. Trading pattern for the rest of the day will mostly hinge on global markets and trends in liquidity flows. No major fall is expected, though some reversal may not be ruled out after a three-month rally.

Budget and monsoon are the two big events that would have a bearing on sentiment. We will also have to contend with the latest quarterly earnings and RBI's update on the monetary policy next month. Overall the bulls are likely to maintain their hold over market proceedings, but don't be surprised if they run out of gas once in a while.

A sideways movement with a positive bias is what could be in store for us in the run up to the budget early next month. Select stocks will continue to hog the limelight based on the newsflow. Taking some cash off the table and sitting on the sidelines may not be a bad idea at this juncture when the near-term outlook is a little hazy.

Power Finance Corp. (PFC) and Shipping corp. of India (SCI) results will be announced today.

Keep an eye on RIL and RNRL, as the Bombay High Court is set to announce a final verdict on the long-standing dispute between the two Ambani siblings over the sale of gas and its price.

FIIs were net buyers in the cash segment on Friday at Rs4.69bn while the local institutions pulled out Rs2.5bn. In the F&O segment, the foreign funds were net buyers at Rs757.7mn. On Thursday, FIIs were net buyers at Rs9.93bn in the cash segment. Mutual funds were net buyers at Rs2.98bn on the same day.

US blue chip stocks finished higher mixed on Friday, enabling the Dow Jones Industrial Average to erase its losses for the year. However, the broader market and technology shares closed nearly unchanged.

The Dow Jones Industrial Average gained 28 points, or 0.3%, at 8,799.26 ending above its 2008 close of 8,776.39. The Dow has now risen in 12 of the last 14 weeks, rising 33% in that time, for its best 14-week stretch since March 1975, according to Dow Jones.

The S&P 500 index closed nearly flat, at 946.21, ending at a seven-month high. The Nasdaq Composite index fell almost 4 points, or 0.2%, to 1,858.80 after ending the previous session at an eight-month high.

For the week, the Dow and S&P 500 ended with modest gains, while the Nasdaq ended lower.

US stocks have rallied for three successive months, since bottoming March 9. Since then, the Dow has gained just over 34%, the S&P 500 40% and the Nasdaq 47%, as of Friday's close. Bets that the pace of the recession is easing have helped fuel the advance. But stocks have struggled recently as rising Treasury yields and higher commodity prices have fueled worries that inflation could hurt a fragile economic recovery.

Treasury prices rose, lowering the corresponding yields. The yield on the benchmark 10-year note fell to 3.79% from 3.85% on Thursday. The yield hit 4% during Wednesday's session for the first time since October.

In the day's economic news, consumer sentiment was little changed in early June, falling just shy of forecasts. The University of Michigan's consumer sentiment index rose to 69 from 68.7, versus forecasts for a rise to 69.5.

A separate report showed that import prices jumped 1.3% in May, in line with forecasts. It was the largest monthly increase since last July, according to a Labor Department report. The increase was due largely to a jump in petroleum prices. Prices rose 1.1% in April.

Year-over-year import prices fell 17.6%, suggesting that inflation fears are not yet being realized. Export prices rose 0.6% in May versus forecasts for a gain of 0.4%. Prices rose 0.4% in April.

BlackRock said it was buying BGI, the investment unit of British bank Barclays in a US$13.5bn cash-and-stock-deal that will create the world's largest money manager. BlackRock shares fell 3.3% and Barclays fell 3.2%. The new firm will be roughly twice the size of its nearest asset-management competitor.

In currency trading, the dollar gained versus the euro and the yen. The US Dollar Index, a six-currency gauge of the greenback’s value, rose as much as 1.4%.

US light crude oil for July delivery settled down 64 cents to US$72.04 a barrel on the New York Mercantile Exchange. Oil futures are up 62% this year.

COMEX gold for August delivery fell US$21.30 to settle at US$940.70 an ounce.

US stocks have now advanced four consecutive weeks. But, many banks are still relatively shaky and another financial shock could derail a tentative recovery. Another threat to the recovery is rising interest rates. Stock investors were relieved to see Treasury yields slide in the latter half of the week.

Bond prices rose after Japanese Finance Minister Kaoru Yosano said that his nation's confidence in US securities is unshakable, assuaging concerns that a record supply of government debt will hurt foreign purchases.

Yields on 30-year bonds touched the lowest level in three days after the auction of US$11bn of the securities attracted the most demand on Thursday. Government securities tumbled earlier in the week after Russia said it may switch some reserves from US debt.

European shares could not extend a three-day rally on Friday, as losses from commodity-linked shares and banking group Barclays offset gains for drugmakers. Investors also turned cautious amid some concern that the three-month surge has outpaced prospects for earnings.

The pan-European Dow Jones Stoxx 600 index declined 0.2% to close at 214.35. The Stoxx 600 index had advanced in the previous three sessions and is 38% above its March low as investors began to hope that the economy will improve.

European equities drifted lower following news that euro-zone industrial output fell by a larger-than-expected 1.9% month-on-month and 21.6% year-on-year April. National benchmark indexes fell in 12 of the 18 western European markets.

Germany's DAX 30 index slipped 0.7% to settle at 5,069.24, while the UK's FTSE 100 index lost 0.4% to end at 4,441.95 while the French CAC-40 index shed 0.3% to end close at 3,326.14.

Indian markets faltered for the second straight trading session on Friday led by selling in the interest rate sensitive stocks. Even the Mid-Cap and the Small-Cap stocks witnessed offloading as both the indices ended lower by 2% each.

It was a day full of surprises as market participants ignored IIP numbers which turned positive after three straight months of decline. Industrial Production unexpectedly rose 1.4% from year ago as against market expectation of -0.1%. Government also announced that IIP for the month of March has been revised to -0.75% from -2.3%.

The Sensex slipped 173 points or 1.3% to end at 15,238 after touching a high of 15,600 and a low of 15,174. The index had opened at 15,447 against the previous close of 15,411.

The NSE Nifty slipped 61 points or 1.3% to shut shop at 4,576.

Asia markets were mixed the Nikkei index ended flat at 9,981. The Hang Seng index was also at 18,791 and Australia's S&P/ASX ended higher by 0.5% to 4,047.

Elsewhere in the Europe, stocks were trading marginally higher. The FTSE index was up 0.5% at 4,459. The DAX index was up 1% at 5,085. CAC 40 index gained 0.2% at 3,322.

Coming back to India, among the BSE Sectoral indices BSE Realty index was the top loser slipping 3%, followed by the BSE Auto index down 2.5%, BSE Consumer Durable index down 2.5%, BSE Capital Goods index down 2.5% and BSE Teck index down 2.5%.

Even the BSE Mid-Cap index was down 2.4% and BSE Small-Cap index was down 2.5%. However, bucking the negative trend were, BSE Metal and BSE Oil & Gas index. Both advanced 1.3% and 1% respectively.

In the Sensex, among the major losers were Ranbaxy, DLF, RCom, Tata Motors, M&M, SBI, L&T and BHEL. Among the major gainers were, Reliance Industries, Sterlite, ONGC and Tata Steel.

Shares of Sesa Goa surged by over 5% to Rs203 after the company signed definitive share purchase agreement with Dempo Group under which Sesa has acquired all the outstanding common shares of V S Dempo & Co. Private Limited.

The company in turn, also holds 100% equity shares of Dempo Mining Corporation Private Limited and 50% equity shares of Goa Maritime Private Limited for a total consideration of Rs17.50bn, on a debt-free and cash-free basis, and includes net working capital of Rs1.45bn.

The transaction has been funded by Sesa from its existing cash resources. As on 31 March 2009 Sesa had cash resources of Rs41.43bn.

Precious metal prices went down on Friday, 12 June, 2009. They fell as the dollar strengthened against the euro mainly ahead of the meeting of the Finance ministers from the Group of Eight industrial nations thereby decreasing their appeal as a hedge against inflation. Nevertheless, gold registered weekly gains but silver incurred loss.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.

On Friday, Comex Gold for August delivery ended at $940.7, lower by $21.3 (2.2%) an ounce on the New York Mercantile Exchange. For the week, gold ended higher by 2.3%. Year to date, gold prices are higher by 8.6%.

Gold had ended the month of May higher by 9.8%. It was the highest monthly gain registered by gold in six months. Before this, gold had suffered losses in prior two months. For the month of April and March, 2009, gold had lost 3.7% and 2.1% respectively. But the metal gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (9%) since then.

On Friday, Comex silver futures for July delivery fell 61.8 cents (4%) at $14.875 an ounce. For the week, silver ended lower by 3.3%. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades. Year to date, silver has climbed 33.7% this year. For 2008, silver had lost 24%.

In the currency market on Friday, the dollar index, which weighs the strength of dollar against the basket of six other currencies, went up by 0.9%. Finance ministers from the Group of Eight industrial nations convened on Friday and Saturday in Italy as they attempted to lay groundwork for the meeting of G8 heads of state at their summit scheduled for next month. The dollar was higher against most of its rivals, with the euro down 0.5%.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

On Friday, crude-oil futures for light sweet crude for July delivery closed at $72.04/barrel (lower by $0.64 or 0.9%). During intra day trading, crude fell to a low of $70.8. For the week, crude ended higher by 5.3%.

Crude ended the month of May, 2009, higher by 30%. This was the largest month gain for crude in almost a decade. Prior to May, crude ended April and March, 2009 higher by 2.9% and 10.9% respectively. It rallied 11.3% in the first quarter. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 51% since then. Year to date, in 2009, crude prices are higher by 43%.

The Organization of Petroleum Exporting Countries (OPEC), which now accounts for about one-third of the world's oil production, said in a monthly report that its May output from its 12 members averaged 28.27 million barrels a day, up 135,000 barrels from a month ago. Thus, OPEC's production rose for the second month. OPEC also said in the monthly report that 2009 global demand is expected to drop 1.6 million barrels a day from a year ago.

In the currency market on Friday, the dollar index, which weighs the strength of dollar against the basket of six other currencies, went up by 0.9%. Finance ministers from the Group of Eight industrial nations convened on Friday and Saturday in Italy as they attempted to lay groundwork for the meeting of G8 heads of state at their summit scheduled for next month. The dollar was higher against most of its rivals, with the euro down 0.5%.

In a monthly report released a day before on Thursday, the IEA, an energy advisor to 28 developed countries, increased its global oil demand estimate for this year by 120,000 barrels a day to 83.3 million barrels a day.

Earlier this week, the Energy Information Administration raised its outlook for this year's crude-oil and gasoline prices. The body said that crude prices are expected to average $58.70 a barrel this year. That's up from the $52 a barrel the EIA had forecast a month ago. It also raised the outlook for next year's crude price to $67.42 from $58. The EIA also said regular gasoline prices are expected to average close to $2.70 a gallon in July. The average regular gasoline price averaged across the full year is expected to be $2.33 a gallon.

Also at the Nymex on Friday, July reformulated gasoline fell 2.18 cents, or 1.1%, to $2.0431 a gallon and July heating oil dropped 1.59 cents, or 0.9%, to $1.8375 a gallon.

Natural gas for July delivery also retreated, down 5.6 cents, or 1.4%, to $3.877 per million British thermal units.

Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.